On Mar 7, we issued an updated research report on Milacron Holdings Corp. (NYSE:MCRN) . The company is poised to gain from the rising demand for plastics in many markets, introduction of new products and cost reduction initiatives. However, input cost inflation owing to the impact of tariffs is expected to affect near-term results.
Milacron Holdings Corp. (MCRN): Free Stock Analysis Report
Mueller Industries, Inc. (MLI): Free Stock Analysis Report
Lawson Products, Inc. (LAWS): Free Stock Analysis Report
Albany International Corporation (AIN): Free Stock Analysis Report
Original post
Zacks Investment Research
Weak Q4, Poised for an Improved 2019
Milacron delivered adjusted earnings per share of 48 cents, declining 18.6% year over year. Milacron’s revenues fell 4.2% year over year to $311.4 million during the fourth quarter. New orders in the reported quarter declined 13.3% year over year to $274.2 million.
Milacron projects sales to decline 3-4% in 2019, including an anticipated headwind of 1% from foreign currency translation. Steel is the primary raw material input for the APPT and MDCS segments. Consequently, imposition of tariffs on steel prices will continue to impact Milacron’s margins and is projected to have a $4.2 million impact on Milacron’s results in 2019. While the first half of the year will be impacted by the tariff issue, the company assumes a resolution of the trade dispute in the second half of the year.
Despite an expected drop in revenues, adjusted EBITDA margin is forecasted at 17.5-18% in 2018. Margins in the first half of the year are projected at 16% and will grow to around 19.5% in the second half.
Cost-Reduction Initiatives to Aid Growth
Since 2014, Milacron has undergone a number of organizational redesign and cost reduction initiatives to improve cost structure and operating flexibility. This included consolidating manufacturing and back office infrastructure in North America and Europe.
Over this period, the company has increased consumables mix from 60% to 66%, raised EBITDA margins from 14.9% to 18.2%, and reduced working capital from 22.4% to 19.3%. The company also improved free cash flow from negative to $102 million, reduced leverage from 4.8x to 2.9x, and trimmed cash interest from over $70 million to $43 million. With the restructuring now complete, the company will now focus on improving its operations, optimizing product mix, improving service to customers and improving financial performance further.
Rising Demand for Plastic to Sustain Results
Demand for a diverse range of finished plastic products has been on the rise in many markets, including automotive, construction and consumer products. This is being escalated by global population growth, sustained urbanization, increased purchasing power and improved lifestyle in emerging markets. Given its strong global presence, Milacron is well positioned to capture a portion of this growth. The company has made significant investments in China and India, considering the projected growth rate of plastic business in these markets.
Milacron’s strategy is focused on improving revenues and operating profits through selective initiatives that leverage its market position, geographic footprint and core competencies. Management expects profitability to be supported by revenue growth and margin expansion in the near term. Revenue growth will come from underlying market growth in key segments, geographic expansion of certain product lines, continued penetration of the $2.8 billion hot runners market, and incremental share gain from new products. New products are focused on solidifying the current market position, expanding addressable market through the introduction of technology that displaces other materials, primarily metal and glass.
Share Price Performance
Milacron has plunged around 42% over the past year, compared with 20% decline recorded by the industry.
Zacks Rank & Stocks to Consider
Milacron currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the Industrial Products sector are Mueller Industries, Inc. (NYSE:MLI) , Lawson Products, Inc. (NASDAQ:LAWS) and Albany International Corp. (NYSE:AIN) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Mueller Industries has expected earnings growth rate of 2.2% for 2019. The company’s shares have gained 20% over the past year.
Lawson Products has expected earnings growth rate of 102.5% for the current year. The stock has appreciated 23% in a year’s time.
Albany International has expected earnings growth rate of 35.6% for 2019. The company’s shares have rallied 17% in the past year.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
Milacron Holdings Corp. (MCRN): Free Stock Analysis Report
Mueller Industries, Inc. (MLI): Free Stock Analysis Report
Lawson Products, Inc. (LAWS): Free Stock Analysis Report
Albany International Corporation (AIN): Free Stock Analysis Report
Original post
Zacks Investment Research
3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or
remove ads
.